Michael Strain’s new jobs agenda and mobility payments

I have been meaning to cover this topic, here is an overview from Reihan. There is one brief version from Strain here. He has many valuable ideas, and the one which has caught my attention is this:

Offering relocation vouchers to the long-term unemployed in high-unemployment areas…

There are some pretty good jobs around, including in parts of Texas and North Dakota. The point is not that these jobs/regions could absorb all of the current unemployed, but rather that we can learn something about the current unemployed (at the margin of course) but noting that these jobs remain unfilled.

First, I would like to know what the unemployment (participation?) rate would be today if American labor had a mobility rate closer to that of the early to mid 1980s.

Third, I wonder if a subsidy is the right response here. After all, there is already a potential benefit from moving, assuming the subsidy idea makes sense in the first place. Yet, if we are to accept many of the more pessimistic behavioral accounts of unemployment, a lassitude and feeling of hopelessness sets in. Positive incentives may not suffice, at least not in the absence of a behavioral spur to change the process of decision-making and induce some more pro-active choices.

By the way, there are some bureaucratic complications — not daunting ones but costs nonetheless — if you switch states while looking for a job and collecting UI. Perhaps these paperwork requirements could be eased and turned into a simple one-click process.

What if it turned out that a tax or penalty for unemployed non-movers was overall more effective? Would or should we be willing to support such an idea? Of course it would inevitably fall on some innocent victims as well, people who should not move or people who cannot move, perhaps for reasons of family ties. How about a tax for staying combined with a benefit for leaving?

How about if the tax is based on a Big Data model to limit the number of unjust losers? That would mean more frequent taxes for Appalachian stayers, and less frequent taxes for individuals with elderly dependents on their tax returns.

If the tax were a big net plus for the current unemployed, but hit some innocent losers, and sent the wrong mood affiliation, would we still support it? Should we still support it? What if the tax took the form of poor public services? Does it need to be more aggressive than that?

“Should we even be asking these questions?” No. There are plenty of foreigners who would love to get guest worker visas, as New Zealand recently doled out, to work temporarily in the USA. Just open the borders. There’s no need for Americans to work anymore, just live off your past glory. No I’m totally serious. The US consumer has already done this effectively, with their low savings rate. It’s basically taking advantage of the mystique of having the dollar as the a de facto reserve currency in the world.

And here’s proof of the power of printing your own currency: “Facebook to buy WhatsApp for $19bn” (“The company said in a statement that it would pay $4bn (£2.4bn) in cash and $15bn (£9bn) in Facebook shares as part of the deal.”)

There you have the power of modern finance: $4bn in fiat cash (20%) and $15b (80%) in shares, whose value, like bitcoin’s, is in the eye of the beholder. Revenue of Facebook: a mere $1b last year. The power of imagination.

I was really excited when I heard about this deal, depending on what assumptions you use this deal might create upwards of $100bn per year in new GDP. WhatsApp has a huge userbase in Europe and the synergies between Facebook and WhatsApp are absolutley phenomenal. Another Brilliant move by Mr. Zuckerberg (LONG Facebook).

As to your second point, the 80% in Facebook shares means that the founders of WhatsApp have just made a smart deal where 80% of what their being given are essentially riskfree assets. Fiat currencies like the US dollar was in terminal decline but I think if we seriously considering the supernova bright future of companies like Facebook and Twitter one can see that their shares should now be considered on par with Gold as being a serious, stable, low risk asset. BitCoin is the 800 pound gorilla in this room of course but we need to wait until it becomes more mainstream.

$1250 is a lot of money for the poor. I know a couple who came to DC from the Midwest, with bus tickets and their stuff in plastic bags, and ‘got rich’ to the point they can afford a downpayment for their own house now, by moving to the DC area. But arguably you don’t need any money to move, just ambition. Here in the Philippines, I kid you not, some poor girls are so enamored with their simple village life that they will not leave to go to the USA with a rich American like me even though they only make $2.50 a day working. It’s not so much that they don’t trust me or like me, but rather they just like the way they are (no imagination).

But the folks who can up and move with everything in a garbage bag, who want to move, have done so already. I think Rahul’s question is relevant, of the folks who are still left but who want to move (presumably folks with family and belongings and a support system where they are), is $1250 enough? And it’s got to be not just enough to move, it’s got to be enough to take the risk of moving, because if moving doesn’t work out, you need to have enough to move *back*.

I wouldn’t do it. I might use the subsidy after having other assets saved, but packing up a family of five to go to some place I don’t know on spec with just over a thousand in my pocket?

You’d have to increase to maybe $4,000 per family to make an impact, I’d think, and I’m sure that money could be better used.

Besides, this just pisses me off. Why are employers discriminating against people who happen to live a bit further than they’d like? What so great about recruiting locals? And, if there is nothing great about it, what stops an unemployed in whatever to apply to a job in Dakota. Once you have a firm, longish term contract, moving is so much less daunting..

I think you stumbled on a key issue — in the US labor mkt, there’s almost no such thing as a “firm, longish term contract”. We’re an at-will employment country, and our business sector is dynamic which reduces job stability. The npv of a new job, particularly a low-end job, may not justify the investment of uprooting oneself.

I think it’s a good idea. The psychological/social challenge of relocation can be enough to deter many people. Getting rid of the financial barrier, perhaps through a program such as relocation vouchers for the long term unemployed, could very well prove to significantly induce labour mobility across geographical regions in the real world.

The damage that extreme East-Coast Harvard leftist like Barny Frank have done to this country is almost immeasurable. I’m glad you brough this up – Barny Frank’s entire Congressional career boils down to a radicalized man trying to shackle the poor to their homes so he can turn around and claim it as progress.

Americans are relocating to North Dakota because employers find it impractical to hire illegal immigrants for less (illegal immigrants lack networks in the Dakotas, and the cold daunts them), so they have to pay honest market wages to our fellow citizens. In contrast, ten years ago there was little point in Americans relocating to Las Vegas or Phoenix to take advantage of the boom because employers wouldn’t pay enough because they could hire illegal aliens.

One big lesson: If you want to encourage Americans to move, you have to ensure them that they won’t be replaced by cheaper foreigners, whether illegal, legal, or H-1B.

SS SS sez: “(illegal immigrants lack networks in the Dakotas, and the cold daunts them)” HAHAHAHA! Obviously you’ve never been to the Dakotas like I have: you’ll find lots of immigrants, e.g., Laotians (warm weather people who love St. Paul, MN inter alia), Eastern Europeans (who know a thing or two about cold), etc, since for some reason Uncle Sam likes relocating them there. And in that mix you’ll find illegals too. You should like some bookworm that gets all their information from back copies of Reader’s Digest and Encyclopedia Britannica, rather than the real world.

Wages are too high as is, not just for low skilled jobs but for middle skilled jobs such as engineering that’s why we need MORE H1B visas – and once we sufficiently expand our survallience and policing capabilities Open Borders. High wages are sucking up scarce capital and stifulling otherwise fruitful investments. We are also moving too slowly into the fully virtual economy where things such as relocation become irrelevant.

It’s up to the free market to decide whether those traits are accurate or even valuable. Top Silicon Valley companies have been calling for an expansion of H1B because they’re struggling due to lack of talent. If all of these things were true companies like Google and Facebook wouldn’t be asking the government for more H1Bs. Holding back here is only dimming our future prospects and failing to win the future for our children.

Agree to disagree. Free market? You mean fat cat Silicon Valley plutocrats, don’t you? If history teaches us anything, it is that the only way to secure the future for our children is to end ALL immigration today.

There’s a big difference in the percentage of American natives moving to North Dakota today versus the Sand Sate subprime mortgage belt in 2006. The government records the ethnicity of everybody who gets a mortgage to prevent discrimination against minorities. The share of subprime mortgages going to minorities in 2006 in the exurbs of the Sand States was spectacular.

In contrast 40 million Americans or so move each year. North Dakota is statistical noise. This is a classic fallacy of comparing percentages without understanding the base. North Dakota has less than 700K people and that figure has been flat for decades (https://www.google.com/#q=north+dakota+population). Compare this to NYC which has 8 million people by itself.

As for Sailer’s assertion, on the previous thread he was unable to address the actual stats. During the subprime boom minority homeownership rates barely moved. There simply were not enough minorities in the country to give loans to to make a subprime bubble.

North Dakota has always had a lower unemployment rate than the entire US. North Dakota is a niche. It has a very small, and very stable population. As a result it has a much lower natural unemployment rate. It doesn’t vary much because no one moves to North Dakota unless they either already have a job lined up, are moving in with someone who has a job, or they have connections in ND so they know how to get one quickly.

There’s a price to pay for that, ND is also a place of lackluster growth. Since there’s little dynamism, there’s little opportunity for real growth, including the type that might lead to people moving to ND, hence that’s why its population has been flat for over 4 decades. ND’s lucky in that they have a boom in natural resources, but that’s simply luck. Other states can’t copy ND in that respect and the problem with mining and drilling is when the resource is extracted or the price collapses there’s nothing else left.

Or do you have the secret for living without money? Maybe levitating and flying from place to place and creating food from nothing with the power of your mind?

Locke argued that in America the vast common land would support all comers who could be hunter-gathers or simply improve a plot of land and gain landownership. It seems that vast common land is gone, so nature no longer provides for those without resources.

Most (all) companies will provide moving allowances for new hires of all types if the are really short labor in their area. If you want to move unemployed people with no jobs or prospects from one place to another that’s a different story (why do you want to do this?).

People are building trailer communities and super low cost housing to absorb the influx of energy workers in places like North Dakota.

In the future (maybe actually now) we may need entire ZMP cities in which no-one works or is expected to work in exchange for loss of complete reproductive choice. It might not be a bad idea to start building a few test cities out in the desert where land is cheap and solar energy is free.

This is a good idea however it is actually not neccessary since we are on the cusp of a major (to put it VERY mildly) Silicon Valley led technological revolution (see the eye-popping $19bn purchase of Whatsapp by Facebook – HINT: LONG Facebook). Once we get over this hurdle (and it won’t be EASY) there’s going to be a flood of new jobs created. What Kind of jobs?

Personal service to make life more enjoyable for the productive elite: Footmen, Shoe Shiners, jovial old Italian barbers, personal shoppers, prostitutes, fat, hot-tempered but endearing French chefs, hauty butlers etc.

Also there will be an expanded world of new online services such as Facebook-based Brand Empowerment consultancies and Bitcoin mining.
How do we get there? One word: Immigration.

Here’s how Canada handles this situation (or at least did so with an acquaintance of mine). If you’ve been getting unemployment benefits for too long, they send you a letter that basically says: “Hey, we’re cutting you off. You should move to Alberta where there are jobs.”

This sounds a bit like the common (a bit nasty) technique for decreasing your local homeless population–have the cops round up all the homeless guys they can find, and put them on a bus to Phoenix with a sandwich and a little cash.

If you are unemployed with no income, what taxes are you paying that would benefit from deducting moving expenses?

Tax deductions and tax cuts to put money in your pocket when you have no income or assets is typical free lunch economics which seeks to solve poverty with tax cuts and tax deductions as if taxes are the reason people are poor.

Why have economists rejected the principle of profits being the problem – profits indicates unused resources that are denying consumers goods and services and also denying workers jobs and income so they can consume more? Profits are supposed to result in employing more labor to produce more goods and services to sell for lower prices either by direct production or by buying productive capital assets. Profits are bad for an economy; only a fair market return on invested capital is allowed in a functioning efficient free market economy.

The best option would seem to be to get a private charity of sorts to run a fairly small trial relocation assistance program, varying the size and type of benefits to see what works. Get Gates or the like into the idea.

The biggest barrier will always be family and friends. Moving to a new place with neither can be rough.

We currently have policies in place that anchor people by encouraging home ownership and make relocation difficult by trying to keep housing values high (the drop in housing values during the recession was seen as a “problem” rather than a benefit). Both of these policy goals tend to make relocation difficult. I don’t really think that the first thing we do to correct the problem is to add another distortion through relocation benefits, rather than trying to remove the existing distortions that are contributing to the problem.

Don’t forget the promotion of car ownership instead of using public transport.

If you are broke, the real economy does not work as the free lunch economists claim and provide a reliable station wagon and cheap gas so you can cross the country by panhandling for the money for a car, gas, and food, and the 10 cents to shower at the Y.

The biggest problem the poor having in getting a job is lacking the reliable transportation to actually show up for the job on time on the employers schedule.

Lots of folks back East, they say, is leavin’ home every day
Beatin’ the hot old dusty way to the California line
‘Cross the desert sands they roll, gettin’ out of that old dust bowl
They think they’re goin’ to a sugar bowl but here’s what they find

Now the police at the port of entry say
“You’re number fourteen thousand for today”

Oh, if you ain’t got the do re mi folks you ain’t got the do re mi
Why you better go back to beautiful Texas
Oklahoma, Kansas, Georgia, Tennessee

California is a garden of Eden, a paradise to live in or see
But believe it or not you won’t find it so hot
If you ain’t got the do re mi

You want to buy you a home or a farm that can’t deal nobody harm
Or take your vacation by the mountains or sea
Don’t swap your old cow for a car, you better stay right where you are
You better take this little tip from me

‘Cause I look through the want ads every day
But the headlines on the papers always say

If you ain’t got the do re mi boys you ain’t got the do re mi
Why, you better go back to beautiful Texas
Oklahoma, Kansas, Georgia, Tennessee

California is a garden of Eden, a paradise to live in or see
But believe it or not you won’t find it so hot
If you ain’t got the do re mi

“What if it turned out that a tax or penalty for unemployed non-movers was overall more effective?”

What would you tax, exactly??

Would the tax be imposed on the body of the person and when the debt to the IRS hits $10,000, the body would be euthanized and body parts sold for transplants to pay the tax owed?

The Constitution prohibits imposing the tax debt of one on his issue – no corruption of blood.

“After all, there is already a potential benefit from moving, assuming the subsidy idea makes sense in the first place.”

Well, this is just more free lunch economics. Apparently Tyler believes that the unemployed person with thousands in debt will be served by the free market with unlimited credit to buy a reliable car to drive to the North Dakota, towing the camper the free market prices at $500 so he has a place to live, and pays for gas and food on the way. Maybe the free market will price the gasoline ar 10 cents because he can’t afford more than the buck he got panhandling.

Free lunch economics just never admits that people can’t live for nothing because the common is no longer there for the people with no other means to live off. Hunter-gathers needs large areas of land to thrive, and even subsistence requires more common than exists today in the US. The America that Locke based his ideas on no longer exists to provide the vast common to support the people in need. And free lunch economists damn the common and call for everything to be privately owned. Thus those without land must be paid if they are to survive.

We have a lot of common out West, but we have to ask the federal government to use it, and use it according to its very restricting rules.

So as an example, we have acres and acres of beetle-killed standing pine, wildfires come through and eat them like air, but at the same time hefty programs to help people pay their heating bills in the winter.

I recognize it’s oversimplifying in both directions to say one could take care of the other — many of the aid recipients are elderly that certainly aren’t going out chainsawing trees, and it’s hard to get in to some of those areas. Still.

I think the “ready job” issue is the biggest hump to jump, after which you probably don’t need much in terms of relocation subsidies to get people going. You need programs to help people line up jobs in other states.

The purpose of taxation is to provide revenues for the functions of government’s.

Read again: “revenues for the functions;” not an “instrumentality for the functions.”

The perversion of the purpose of taxation (perverted to serve as an instrumentality of governmental function) has led to the gross politicization of taxation in both application and avoidance.

The social and political issues of the appropriate functions of governments has become extended to the functions of taxation, it’s complexities; to those perversions and the debilitating effects of the resulting conflicts.

I am unworried by this however because very soon Bitcoin will become mainstream enough that the government will find it impossible to collect revenue from taxes at all. At best it might have to try to be competitive in Bitcoin mining.

That’s a very good question. From what I gather, this is simply an accident based on the statutory language of “carrying on” in IRC section 162. I don’t think there’s any policy rationale whatsoever.

Then again, no matter what, it’s a 2% miscellaneous deduction and an itemized deduction, so it’s worthless unless you itemize AND your “miscellaneous” deductions exceed 2% of your income. So it’s not all that helpful in practice, I suspect.

“There are some pretty good jobs around, including in parts of Texas and North Dakota.”

Apartment rents are 50% higher than NYC in the oil boom parts of North Dakota, around $2400 per month. That is 4 hours a day at $20 per hour every day of the month..

“The cost of living has surged; stores and restaurants have raised prices so they can pay wages of up to $20 an hour to compete with the high-paying oil jobs. High housing demand and skyrocketing rents across the state have also pushed thousands onto the streets, including many newcomers who failed to keep jobs. Homelessness in North Dakota has almost tripled since 2010. In Williston, the Salvation Army has resorted to buying homeless men one-way bus tickets. “Sometimes, they’re better off going back home,” said Salvation Army employee Joshua Stansbury.” — http://theweek.com/article/index/251281/north-dakota-trouble-in-boomtown

Re: Some states offer relocation assistance, for Wisconsin you need to have a job elsewhere already lined up.

And that SHOULD be the rule. Unless you have someone in the new location you are very certain will put a roof over your head as long as need be, you should never move some place new without a job lined up already. Doing so is a short trip to homelessness.
Meanwhile you can certainly search for a job long distance very easily. Only the crappiest or rarest jobs are advertised just locally these days. I’ve done long distance job hunts (successfully) three times in my life– once during the jobless recovery of 2002 which ended up with me moving to Florida

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